tv Bloomberg Markets Bloomberg August 31, 2015 11:00am-12:01pm EDT
everyone's mind. untilay it will not come march 2016. behind what is samsung's incredible plunge? alix: we look at the future of tennis. adults are increasingly staying off the court, but the kids are taking to it. ♪ olivia: good morning. welcome back to the bloomberg market day. minutes into the trading day in new york craigslist that you look at where u.s. markets are trading right now. we are all session lows, but the outcome of the nasdaq, and the s&p all firmly in the red.
only majorthe efforts to be in the green for the year. stocks,s, energy reflecting the oil prices. it is set for a third monthly .rop alix: we have not seen this level since 2011. truly ugly on a monthly basis. you are looking at the forward curve of the vix and we talked about volatility and how that plays into the market. take a look at what traders are expecting by september of 2000 16. calm is a little bit more
coming into the markets. olivia: four at least hope. volatility, breaking through 50 last week that nobody saw coming, it shows a buying opportunity. that manyasset investors are buying as a safe haven is the euro r. the currencies are moving up in tandem with the highest correlation is 2007. the dollar not participating as much in that. you can see that the yen is up and the euro is up versus the dollar. nonetheless, striking the highlights. olivia: let's take a look at this top stories we are watching for this hour.
earlier on bloomberg we asked where u.s. stocks are headed, and this is what they said. >> we need time. what happened last week was reflexive. if the market should decline faster than we expect from you will probably need the bottom liquor. but we are in that time of year where the market is u susceptible to decline. olivia: chinese stocks have not yet bottomed out. walmart is spending $1 billion to raise employee wages and give them more training breaks the world's largest retailer has been cutting some workers hours in order to keep costs in line. those walmart employees-told to leave shifts early or take longer lunches. alix: exxon will go ahead with the deal to create the largest utility in the u.s. and
regulators in several other states have approved the deal. ave than 30 days for reconsideration. will develop ways to store and analyze glucose levels in real-time. affect anill estimated 600 million people by 2035. it has not been a good year for endowments of the nation's public universities. returns failed to meet industry standards. by three point 3% return, ohio state, indiana, and the university of florida were all below 5%. those are your top stories this morning. olivia: coming up in the next hour, much more, including from grace.ging it is no longer the top smartphone company in china.
and all ads for growth stacked against macau. the latest gdp data shows a 26% drop. we also look at the tennis industry. lower engagement has given the sport pause. to go to matt miller with a look at what is happening in the market right now. it has been quite a month for stocks. matt: we have lived through the last couple of weeks. even though we had great rallies on wednesday and thursday, the net total was down for the month and in fact, the worst month in four or five years, depending on where we close. you can see that indexes have come back from their lows, but they're still not doing well. the data is down 175 points. it climbed back to a
double-digit loss, but we are back at 133 down. the worst month since 2010 for the dow if weekend here. it has been three years since we have seen a month this bad for the s&p and the nasdaq. s&p can be at the can see the tech stocks are the we come back a little bit into the midday trade. twitter is one of the big winners because suntrust upgraded the stock and said it had a $38 price target of bill next 12 months. we are looking at $28 a share right now. a number of reasons, the first and foremost is that it has fallen since the first quarter. the big plunge was overdone, but also the company expects management clarification to come sooner rather than later rate --
rather than later. will we see jack dorsey staying there as ceo? we heard mark andreessen saying -- ford founders for first founder staying with the companies. we also had an upgrade for jcpenney as well. a big turnaround, 40% this year. deutsche bank says there is room to run, at least three more dollars in the stock. mix at jcpenney has turned around to be more appropriate but consumers will spend and the money they are saving at the pumps in stores like this. not bad for jcpenney. 66 we have, zillow been talking about this morning as warren buffett expanded his
stake for sure halfway. the stock is gaining more than .% trainers have really benefited in a way that the web producers have not let me price comes down. they boosted the amount of crude that they are refining. and phillips is the biggest in the u.s.. poised to do well from that and the fact that people are driving more than ever. back to you. olivia: it is a big bet for warren buffett. americans are still in gasoline. alix: part of the reason we are seeing this steep slide in stocks is the energy sector. we take a look inside my terminal. you're looking at oil prices versus oil stocks. inside my terminal, the red line is trading around 4452, that is oil. the blue line is oil stock. if these two were to meet, that represents significant decline potential for energy stocks. it does show that there has been a divergence recently.
past two years there has been a historical anomaly where the pfizer has been a to virgins between the price of equities and the underlying commodity. it is interesting that they do but to be close together. clamor -- alix: we saw a killer rally, so that has an expiration of why we saw oil, off. but a critical factor to moving energy stocks in the s&p and an explanation for why they are tracking lower. olivia: another question is when is that going to raise rates? he was inlooked like play, then it looked like it was off the table. september may be back on the table because we heard stanley fischer, the vice-chairman, say that inflation is something that has to get to 2%, we just have to believe it will get there.
working wirpgo, we're 38%ng investors pricing and chance that they will move on september. when bill dudley was speaking, the probability dipped as low as 22%. can see just how rapidly the odds of september have shot back up. inwill see what happens september. alix: that two-year yield very sensitive to any expectation. ahead, samsung is struggling to beat with apple and other smartphone makers. it latest devices failed to hit with consumers. ♪
alix: top stories. in kiev, violence broke out between police and protesters outside of the parliament. thrownsay a grenade was at them, killing one officer and wounding is india's 90 others -- s many as 90 others. created a 15 mile traffic jam on the hunt gary inside of the border. five suspects have been arrested in the truck abandoned on the side of the road. brought heavy rain
friday. wind on the governor is giving them until september 8 to finish the proposal. those are your top stories at this hour. world bank of indiana governor spoke about the global economy with bloombergs michael mckee at the 10th gathering over the weekend at jackson hole. ofwe are in a time industrial growth that would be better if we grew faster. central banks have pretty much done with the could do. isis not if you that universally held, but in general across the world, central banks have done pretty much what they are capable of great now others have to step up and whether it is through structural reforms,
, butme cases fiscal policy those might be the sources that we have tried doing too much right and as a result, in certain asset markets, prices are not correct. whether that happens smoothly, or that happens in a volatile fashion, i guess is anybody's guess. >> do you believe the secular stagnation argument? to thee is some validity fact that we are growing far more slowly than in other recoveries. there is something that is going on. i do not know if this is more of long-term factor given all of the innovation in what is happening. hope that we would find some way
of monetizing all the good stuff that is happening and let it add to gdp and find that we are actually growing pretty strongly. >> one of the consequences of innovation is that if you have a surplus of labor, you cannot use it to grow in the way china has ofthe past given the pace automation, has india missed a chance to develop? >> i do not think so. sure, we have to do a lot more work now than we would have had to if we follow the same thing 20 years ago. we certainly need to scale our workforce much more. that the real benefits going forward would be in the management of technology and the human beings. bringing them together to do a task rather than talk knology replacing the human being. -- technology replacing the human being.
my hope is that we can figure out how to do those things, over the internet. people start an dropout rate quickly. but if you've a tutor holding your hand, the jury out exactly what you do not understand and helping you along the way, those classes can become very effect. you have a top-notch team giving you the lecture, and helping you understand what you do not understand. and prodding you to continue. that would be be the most sensible way to deliver courses.ses -- >> can india skips the middle step? >> i think we should create the environment where we can become i would thinkg
women of our level in manufacturing and we are now. olivia: it has been a rough ride for samsung over the past couple of months. it has caused a one to decline in quarterly profit and triggered a loss. shares are down more than more than 8% as much. johnson joins us on set. for theses a problem guys that there are not as popular as earlier versions. david caps on volume more than any other company, because the profit margins are not as high. alix: 40 they go, seeing that
they have a lot of product rollout? fundamentally, if you look at their operating market you see the problem. they are trying to beat head-to-head with market share, and using a commoditized project when you have this one phone gadget, andittle can make a substantial part of share. focused on there high-end apple customer or do they really have a chance of reading of the low-end competitors in mainland china? i think xiaomi is one of the more important companies because of this ability to .nseat dominance in that market
that is really where they have been hurt the most. time, the ability to expand beyond china is not questioned enough to their concern is about how much the patents will hold outside of china they are trying to move into india. alix: is the fall from grace less about apple and more about samsung misunderstanding the market? cory: points to the problems with the business model where you have things different from other products. they are relying on the money sent by google to create an android operating system. i think that is why you see those margins compressed because they are pushing so hard on the hardware side of things. olivia: what we know about
samsung leadership? cory: this is a very convoluted company with lots of different businesses. the changes at the top or a big deal. alix: what can we expect to see? what would be some of the big changes we seek to extend the time? -- stem the tide? cory: overly produced events that have been in the past raise the stakes for the future. their edge phone was not that successful. there would have to have something in the marketplace that will give them another shot. but the way that the businesses are constructed they will have some problems. thank you so much. i am here for the whole week? cory: i am here for the whole
olivia: more discouraging economic china news today. the city of macau saw a drop. macau is the world's largest casino market. gambling revenue accounts for 80% of its economic output. we also read in the financial times that they have $20 billion worth of new casino hotels, and entertainment projects coming online over this year and the next.
they quoted one gambling executive to say it is too early to call bottom. alix: the mass market is declining as well. company themselves is dealing with rising labor costs. dft actually did bring up the point that you don't often worry so much for the gdp in macau, or the economy, because unemployment is still 1.8%. and tourists are still coming. but there's also this bigger issue of the crackdown on graft in china. you're seeing constituent -- conspicuous consumption falling off. alix: tracking in line. but the unemployment rate is still much better than you would think when you have that. said that the government should send more to
improve tourism infrastructure after building up the surplus when the gaming industry was actually for -- booming. if there is more investment that might help the unemployment rate and the gdp as well . olivia: it is not my scene. i have been to vegas once, but i will never go back. alix: me too. . went for a conference much more coming up on the bloomberg market day. the shanghai composite dropping way down and getting back some of the losses. he'll closing down. ♪
way to alaska. he will be the first president circle. the arctic the president is changing the mckinley tot mc denali, and alaskan name meaning the great one. apple is at odds with its silicon valley neighbors over new technology. the wall street journal says new apple operating systems will make it easier to block ads on iphones and ipads that could tot companies who want generate ad revenue from an online audience. quirk pushes labor day weekend and the sales that come with it into september. last year the holiday weekend may have 20% of august sales.
improv a volume of the two sides cannot come to an agreement in today's hearing. roger goodell was in federal court here over the four-game suspension of the new england quarterback tom brady. a judge had told him to settle a dispute. he now may rule in the case as early as tomorrow. of there your stories morning. the markets are closing in europe for the very latest we want to go to mark barton in london. 900 billion euros. that is the amount of value that disappears from european stocks in the month of august and in percentage terms, 8%. the biggest monthly drop since august 2011. every single industry group on the stoxx 600 fell in august, led by oil companies, mining companies, and local companies,
16 billion euros of value disappeared from the chemical industry. the oil and gas industry hurting. when will the fed raise rates? that is the big question right now. the french telecom company reported weaker than expected profits. cuts.ns to widen its cost estimate alders reduction in dividends for the year. a supergiant natural gas field off the shore of egypt and 900 billion euros of value has disappeared. what is the best performing
stock? 20%.etting company up by there are the details. back to you. alix: thank you. ofre isno shortage speculation on when they will raise rates at the vice-chairman said that inflation is poised to move higher. china does notin necessarily translate to a hike delay. germany is on the phone is the weeking director, who last said the fed will forgo a september rate hike and raise interest rates in march of 2016. that note when it came out last week. i was very surprised by the revision after mr. fisher's comments and the weekend. do you still feel that way? >> we do. when china liberalized its exchange rate, we saw that
weaker asian currency would not be enough to shift the fed off of a september hike in his the , we felt that the committee will take notice and higher uncertainty alone would be enough to cause delay. we think they will discuss it and it will be on the table. feel it will tie into an already fragile environment and a prudent move would be to wait and ascertain the source of the volatility and see how persistent it has been, or how persistent it will be. theave slowed activity in -- we want to see what will happen in august and september. alix: volatility states and 38%
now. what is your model? how do you correlate financial stress and financial conditions through real consumption here in the u.s. the changes the probability? >> look at two things when need raising.is the weaker spread, the dollar has moved higher. all of that correlate, or would be the same as the fed raising rates to begin with. if they do, they would be doing more than the originally planned. but the second thing is we do find a direct relation between movements.
the next shot up into the 40's. it is in the mid to high 20's. it does bounceback off of high that does correlate to times when payroll growth slows and investment flows. we do find statistical evidence this causesises in delays in economic activity. alix: i was taking a look at highs, and they are down 7% for august. does that mean that the volatility -- what do you expect that correlation to look like in the next month? >> that is the big unknown and maybe that is a copout of an app server, but because the chinese
authority surprised the market by using the exchange rate past, had not for in the markets are reacting on the expectation that things might be not in september, but something that could ring october december -- bring october or december back on the table. alix: what changes your call? what pushes you back into the camp? >> you need a stellar employment report. the survey concludes the week of the 12th. it will capture higher in activity that happened through august 12.
in this case, the liberalization of the exchange rate took place august 11. this is pretty volatility data. we are calling for a 225 headline payroll. if you have a number closer to 300 and you had a one percent decline in the unemployment rate went that will make them a more relevant decision in our minds and increase the probability. but if we get along the lines of consensus, we think the committee would say we knew labor markets for good already, and most of this reflects data before august 11, maybe we need to wait and see if more. alix: good stuff. thank you so much. still ahead, as the u.s. open begins, we are facing some questions. what is going to keep american kids playing the game? ♪
alix: welcome back to the bloomberg market day. let's begin with the look at the top stories crossing the terminal. oil is headed for its third monthly decline in a row. coming off its biggest two-day rally since 2009. the biggest weekly rally since 2011. prices are down more than 25% from this year's high back in june. no sign the oil glut is going to end. the number of active rigs has increased for six straight weeks. discovered natural gas field covered in the mediterranean is being called a supergiant. it lies just off the egyptian coast.
the company ceo says that natural gas revenues will help offset slumping prices. they could equal 5.5 billion barrels of oil and the obama administration is aimed at punishing china and others for hacking computer networks. the measures have not been decided on yet. those are your top stories. tennis. open championship gets underway today. serena williams aims to complete the sports grand slam. tennis is not being a total resurgence of popularity. young players are getting on the course with all just a third of all players between 16 and 17. but fewer adults are getting involved. for more we are joined by jeff crowns. they operate over 160 indoor and outdoor tennis courts. welcome.
>> thank you. alix: why are adults dropping off? the is thatt of there was such a big boom in the so many players that many people got into it. there was a big boom and then people just started dropping off because there was a lot of fitness clubs coming on their were other opportunities to get exercise. we have not had a dominant player in the last 10 or 15 years. alix: do you notice a description see between women staying in the game and the men? say that because our business is basically juniors, mostly in the afternoon, and that people who do not work in the mornings, and then the men come out, the people who work them out on the weekends very late in very early, that it is
still balanced in terms of men and women playing. i think there's a slight increase in women. that do for the u.s. open and 10 or 15 years, and how is that different from the big players in the tennis world in europe? >> we are very excited about the under 10 movement in europe for many years they have been putting kids a little courts with little racket and easier. hit. they play the game at an earlier age. traditionally here in the state, you get kids in a long and feed them tennis balls with a big racket, big net, the court. it is hard to get into that. it is much more fun playing a game. the way we do it today, and others around the country, the u.s. and forces people to start with many courts, many nuts, and just make it easier to play. we have more kids involved and make it easier to play. alix: it was actually playing
financially? sportas considered such a . they try to appeal to younger people. they want the old man off the field and to bring in the kids. >> absolutely. the barrier to entry is somewhat difficult in colder climates. in new york, there is a lot more indoor tennis and it does get but the big thing is really just to get kids on the court in some way. to try lot of activities to get under resourced kids on the tennis court. for those that do have the money, they can play for five times a day and get really good. alix: what is the role of the superstars? she does it which has time, but i would love to
see her go out to any time of activity that brings a lot of children into play, where she would come into exhibitions or just lend a hand. and when. continue winning. [laughter] alix: what is your prediction for this u.s. open? serena is so good. she is under a lot of pressure, but it would be fantastic for the games if she win. but djokovic is playing great. we would love to see them come back. thank you so much for joining us . gold futures continue to fall alongside equities and a story is next. ♪
york futures in new falling for four straight they go lower.s the action and gold was quite puzzling for a lot of investors. watch all veryou closely. stories ofrd so many people who've gotten on the wrong side of cold very famous hedge fund managers being one of them. they felt like the inflation picture was on the past raising interest rates. you would want to belong on gold. i was very curious why was off. i was curious whether gold was going to rise.
and as we saw last week, it actually file. it is a sign of a couple of .hings in even if the fed raises rates, it will be one and done that is it. school -- school is the real interest rates. positive, why are you going to buy gold is a production of your well? we have seen a huge decline. betty: there are investors on their who would never touch gold anyway.
warren buffett is one of those that do not believe in buying gold. etf,you're seeing from the they are seeing money flow out. the long in gold, interestingly enough, have gone up. positions,ng thinking we will finally see air, not get out of the market, but rebound, and it did not have been. we did see gold increased 45% despite the rate hikes. but there was higher inflation and a weaker dollar right. betty: lesson learned. it is now time for today's options inside.
we're going to talk with jim stricker and take a look at how the volatility situation is shaping up as indexes close out there worst month in year. jim is a strategist at there. we are talking a lot about the vix. settling back down. you say would we see these big jobs, we should not go back to normal right away. volatility spikes are really inverted the entire anures curve goes into
inversion, and then very quickly with that, what many investors think of as a v-shaped recovery for u.s. equities. we think that has changed. when you look at the history of implied volatility, when you get magnitude events like this, certainly above 40, the profiles very different. it does not rollover instantaneously. both slightly higher magnitude events that was almost five minutes before it got back below 20. matt: if even if you go back before that, it takes a while for them to recover to regular levels. what do you think of what we are seeing now? what is the historical norm? >> the average is right around 20, but you have to frame it.
both 30 last, of october. signal a potential volatility. does not mean bear market per se, but over the next couple months, if we see them trying to go around 14 what that tells us is potentially we're looking at .nvironment more corrections of the sentence than 10 friday, folder ability to 218 -- vulnerabilities out to 18. he,: can we have strong as high volatility situations, and still be able market? >> you can.
enjoy july 2007, you had three months before we were in the financial crisis. two very differing things. matt: i want to talk about how you were playing this. are you using intel? >> implied volatility is high-yield. higher than further out. find some things you really like. we have about 40% of an upside tour price target. .e want to sell there is about a 12 volatility pointspread. there are earnings in october, and we're taking advantage of the distortion in the volatility.
alix: the price of oil is headed for a third month of decline. up,ing no signs of letting even as the glut persists. betty: serena williams is making history even for sitting on -- on the court to even before stepping on the court. we will tell you why. ♪ alix: good afternoon. betty: we begin with a look at how the markets are trading. verge ofe on the delivering their worst month in more than three years. we are paring back some of the losses today. we're coming off of earlier declines, and often are intraday lows.